Challenges Faced by Companies Entering Foriegn Markets Essays

Challenges Faced by Companies Entering Foriegn Markets Essays Challenges Faced by Companies Entering Foriegn Markets Essay Challenges Faced by Companies Entering Foriegn Markets Essay 1. Introduction Companies move into foreign markets for assorted grounds. In certain instances. it is towards accomplishing a needed gross revenues volume. In other cases. it might be a command to increase trade name consciousness. Other companies go into foreign markets to re-invigorate gross revenues after their merchandises have gone through their life rhythm – from origin to worsen – in place markets. Regardless of ground. traveling into a foreign market tends to bode great chances for companies. peculiarly if it entails functioning merchandises in an emerging economic system that has late become affluent plenty to afford such merchandises ; or selling a new but needful merchandise or service to a developed and affluent market. However. in foreign markets. challenges are every bit legion as chances. Some beginnings of challenges are discussed below. a ) Socio-Cultural Differences Companies tend to follow patterns that were successful in place markets without accommodating these theoretical accounts to suit the cultural dispositions of markets entered. When big cultural differences exist between the place state and that entered. such patterns may ensue in uneffective concern development and partnerships. An illustration is the now good known Chinese pattern of longer meetings in the command to go acquainted with possible spouses. compared to the Anglo-American pattern of brief to-the-point meetings. Adopting either attack in a market more inclined to the other. will no uncertainty hinder concern development. Language differences are other illustrations of socio-cultural differences that postulate challenges to companies come ining a foreign market. Language differences make effectual and efficient communicating hard between companies and local stakeholders. A light illustration is the Chevrolet Nova which was selling far below outlook in Latin America. Executives of General Motors could non understand why this was so until it was brought to their attending that. in Spanish no va means it doesn’t go . B ) Differences in Levels of Bureaucracy – Efficiency of Procedures and Processes Company enrollment. the gap of a bank history. acquiring import licenses. obtaining needed licences. etc. all reflect the easiness of making concern in a state every bit good as the degrees of bureaucratism that exist in that state. For companies used to comparatively low degrees of bureaucratism. come ining a market with significantly higher degrees of bureaucratism may ensue in unrealistic undertaking programs translated into unachieved execution. degree Celsius ) Differences in Availability of Skilled Human Resources Availability of a peculiar accomplishment in a company’s place market may ensue in givens about the handiness of the same accomplishment in the market entered. 4This occurred in Nigeria in 2001 when the first set of GSM licences were given to foreign companies – MTN and Econet ( both from South Africa ) . At the clip. neither entrant foresaw a famine of local skilled work force. This ended up bing both companies an unprecedented addition in wages and other disbursals associated with delivery in expatriate workers. The challenge of sourcing skilled labors in foreign markets is farther exacerbated when quotas exist on the figure expatriates allowed into the state entered despite the famine of local accomplishment. vitamin D ) Differences in Infrastructure Predominating substructure affects how companies operate. Predominating transit substructure impact how companies move goods and forces for service bringing ; market substructure impact how participants on a given value concatenation relate with one another ; and the degree of basic substructure such as power and H2O affect cost allotments and direction. For companies come ining a foreign market. failure to take into history the infrastructural base of the market entered may ensue in uneffective and or inefficient operating programs and procedures. vitamin E ) Legislation Favouring Local Companies Unsupportive statute law is another major beginning of challenges to companies come ining foreign markets. States tend to ordain Torahs intended to protect or enable local industries. These statute laws take many signifiers. They could be straight-out levies on foreign concerns ; or forbiddance of the activities or direction construction of foreign companies ; or may be through more indirect agencies such as needed licences or licenses to run ; cumbersome enrollment procedures or license processs. 4 David Ogah. Expatriates. some semi-skilled. take over even humble occupations from Nigerians . The Guardian Newspaper Nigeria. December 21 2011. hypertext transfer protocol: //www. ngrguardiannews. com/index. php? option=com_content A ; view=article A ; id=71436: expatriates-some-semi-skilled-take-over-even-menial-jobs-from-nigerians- A ; catid=72: focal point A ; Itemid=598. accessed August 2012. 3. NIGERIAN E-COMMERCE E-commerce is the purchasing and merchandising of merchandises or services over electronic systems such as the Internet and other computing machine webs. E-commerce uses the World Wide Web at one point in the transaction’s life-cycle. although it may include a wider scope of engineerings such as electronic mail. nomadic devices and telephones. - - - - - - - - - - - - - - - - - The major clients of e-commerce concerns are persons populating in major urban Centres in Nigeria. notably Lagos. the commercial capital ; Abuja. the political capital ; and Port Harcourt. an oil rich metropolis in Southern Nigeria ; as these metropoliss tend to house the highest figure of cyberspace users in Nigeria. 5Nigeria has over 47 million cyberspace users. with a bulk of them populating in the urban metropoliss. In the mid 2000s. a twosome of e-commerce companies were launched in Nigeria. They hardly survived. The ground for their death. or in other instances. dead growing. was the trouble of acquiring clients to encompass the e-payment options available in Nigeria at that clip. This trouble was due to known instances of fraud that occurred over the insecurity of Interswitch. the lone e-payment platform available in Nigeria at that clip. However. with the entryway of major card payment solutions like Master card and Visa card in 2006. coupled with the improved security characteristics of Interswitch. the industry experienced an addition in the figure of Nigerians put to deathing on-line payments. 6 ( on-line minutess grew by 25 % in 2011 ) Prior to the terminal of the first one-fourth of 2012. the Nigerian e-commerce scene had been slightly tepid as the lone vibrant participants were Dealdey. com and Wakanow. com. At the beginning of the 2nd one-fourth. the sector experienced an addition in the figure of e-commerce company in Nigeria. amongst which were Rocket Internet’s Sabunta. com and Kasuwa. com. The long-run mentality for the e-commerce industry in Nigeria is positive. with analysts foretelling a important addition in new entrants. The execution of the usage of nomadic money in Nigeria by the Central Bank of Nigeria is expected to speed up the development of the e-commerce industry in Nigeria. as nomadic money allows a greater figure of persons engage in electronic minutess. Presently. the Nigerian e-commerce industry has somewhat over 70 companies. though the industry is yet to hold an estimated dollar value. Companies in the sector are categorized into: a. Manner Retailers These are on-line manner stores that chiefly sell places. apparels and other manner accoutrements. Major participants in this class are Sabunta. com. Kamdora. com. Taafoo. com and 3stitches. com. The clear leader among them is Sabunta. despite the fact that the platform was launched less than 3 months ago while most other participants have been in the scene for significantly longer. Sabunta offers a wider scope of international trade names and possesses a more incorporate logistic supply concatenation. This makes them more capable of functioning clients all around Nigeria than rivals. B. Travel and Tourism These are chiefly on-line companies that sell travel and circuit bundles. The clear market leader is Wakanow. com with a current turnover of 35 million naira ( N35 million ) per month. Other participants in this sector belong to private air hose operators e. g. World Wide Web. fly. arikair. com. World Wide Web. myairnigeria. com. etc c. Electronic Gadgets and Books These are companies that sell electronic appliances and books online. The major participants in this class are Kasuwa. com and Konga. com. It is nevertheless hard to state who the bigger participant is. Both participants are less than 3 months old. Apart from electronics. Konga. com besides retails babe and female makeup merchandises. d. Broad Product Retailers Players in this class include group-buying trade sites such as Dealdey. com. Buynownow. com and Buyright. game. The major participant with the largest market portion is Dealdey. com. It was launched in 2011 and possesses the most robust group-buying trade site in Nigeria. 2. SABUNTA. COM Sabunta. com is a manner online retail merchant that offers a broad scope of International and Nigerian manner trade names for sale in Nigeria. Sabunta. com is an e-commerce company owned by Jolali Global Resources Limited. a in private held company in Nigeria. put up and owned by the German Company. Rocket Internet. Rocket’s central office is the vivacious Centre of Berlin. Europe’s Silicon Valley. place to a web of 25 international Rocket offices that cover the operations of the company’s subordinates in developed and emerging markets. Rocket Internet is the largest. fastest and the most successful international on-line venture builder. It presently has over 50 on-line ventures in 7 continents where they are all playing in the top sections of the market. The primary focal point of Rocket is constructing proven. transaction-based concern theoretical accounts in the online and nomadic infinite. The company has been put to deathing this theoretical account since 2007 and have created over 100 market taking companies in over 40 ( 40 ) states. tonss of which have been exited successfully. The Rocket Internet Company is best known for cloning successful online concern in the US in other states where they play at the top of the market. In Europe. Rocket’s Zalando is presently the largest on-line manner retail merchant. Other good known companies owned and operated by Rocket include ; Wimdu in France. Zidora in Azerbaijan. Dafiti in Brazil. Mizado in Egypt. Locondo in Japan. The Iconic in Australia and Zando in South Africa. Sabunta. com and Kasuwa. com are Rocket’s operations in Nigeria. Both operate from their central offices in Lagos. Nigerian’s commercial capital. place to over 10 % of the country’s $ 413 billion GDP. Sabunta. com and Kasuwa. com service clients around utilizing warehouses in major urban metropoliss. However. Kasuwa. com sells electronic appliances and books. while Sabunta. com sells manner points. Sabunta. com provides clients with flexible online platforms to shop for manner points from the convenience of their places. and delivers these points at the doorsills of shoppers. The company provides flexible payment options including bank sedimentations. on-line payment. and its advanced payment-on-delivery option. really foremost introduced in Nigeria by Sabunta. com. Sabunta. com is immature. The company started operations on the 8th of June. 2012 and is presently merely three ( 3 ) months. Yet it has already become the largest and the fastest turning on-line manner retail merchant in Nigeria. with over a 100 orders per twenty-four hours. The company aims to keep its places as the largest and fastest turning in Nigeria. as is being achieved in other states by other Rocket Internet ventures worldwide. Sabunta. com presently has 71 staff. 24 % of whom are foreign subjects. The work force at Sabunta. com consists of alumnuss from Ivy conference universities in the US and Europe. every bit good as top endowment from Nigeria. Its direction squad consists of two foreign subjects and a Nigerian. 4. SABUNTA. COM TARGET MARKET The mark market for Sabunta. com is Nigeria’s upper and emerging middle-class life in major urban metropoliss in Nigeria. The age bracket of the typical Sabunta. com client is between 18 and 65. This age scope constitutes persons who are capable of purchasing or doing purchasing determinations with respects to manner points. The company’s targeted clients are nevertheless less than 10 % of the mentioned age scope. as the company targets persons with an one-year income of non less than N2million ( $ 12. 500 ) . Sabunta’s mark market constitutes of persons who live and work in major urban metropoliss of Nigeria such as Lagos. Abuja. Port Harcourt. Kano. Kaduna. Ibadan. Aba. Warri and Benin. These persons often utilize the cyberspace and assorted societal media platforms to interact with friends. household and co-workers. They are manner witting. voguish looking and want to show their personalities with the sort of outfits they wear. They besides recognize and wear popular international trade names and store for these trade names whenever they or friends and household travel abroad. 5. SABUNTA. COM STRATEGY Having carefully studied the Nigerian e-commerce scene. Sabunta. com concluded that the major job impeding take-off of e-commerce in Nigeria is the doubting nature of Nigerians towards on-line payments. The company responded by presenting the cash-payment-on-delivery option for its clients. Though the company offers regular recognition card and on-line payment options for those who want to make so. the cash-payment-on-delivery option was an ice-breaker: it made doubting Nigerians participate in on-line shopping. This enlarged the market of on-line shoppers. with Sabunta. com being the lone company to bask the backing of this new rush in on-line manner shoppers. Good public presentation on the portion of Sabunta. com further helped to implement their laterality. On clip bringing. even without holding received payment. helped to instil assurance in its mark market. To cut down jobs associated with fraudulence and larceny. normally by goons presenting as clients. Sabunta outsourced its bringing to Red Star Express. a taking Nigerian Franchisee of US planetary messenger trade name FEDEX – a major messenger company that has been in operations in Nigeria since 1992. known for its quality of service. Sabunta. com besides introduced assorted patterns that. though standard in mature e-commerce markets. were fresh and advanced in the turning Nigerian e-commerce market. These inventions include: a. Free Delivery and Return Policy Prior to Sabunta. com entry. no e-commerce company in Nigeria offered free bringing or allowed clients to return purchased goods. Sabunta. com entered the e-commerce scene offering a countrywide free bringing program every bit good as a return policy which allowed clients return goods bought within the first 14 yearss if they were non satisfied with the status in which it was delivered. To return goods. clients are allowed to drop the purchased points at any of the 158 Red Star Express offices situated in all the provinces in Nigeria at their convenience. This reduces the cost which clients incur during the return procedure. The ability to buy goods at no excess cost of bringing and to return these goods if dissatisfied at minimum costs make Sabunta. com a supplier of high quality at low costs – attributes that entreaty to the monetary value medium and yet choice sensitive Nigerian market. B. International Product Offer Sabunta. com recognizes that its mark market constitutes those familiar with and who wear International manner trade names. Consequently. the company spouses with sister manner companies around the universe. owned by the parent. Rocket Internet. to offer a big scope of international trade names – over 150 different trade names – to the Nigerian market. Sabunta. com enhances the show of international merchandises on its site. both those it has in stock every bit good as those in the stock of its sister companies around the universe. This allows the company function the diverse international gustatory sensations of the Nigerian market. and to react to swerve irrespective of its current stock. 6. Success For a company that has been in being for less than three months in a foreign market. Sabunta. com has been able to accomplish a batch of success and has been able to get the better of a important figure of envisaged challenges. Sabunta. com successes include: a. Exceeding Projected Gross Prior to come ining the Nigerian market. the direction of Sabunta projected gross of ˆ15. 000 from about 150 orders in the first one-fourth of concern. This projection was exceeded after the company’s first month of operations. The company found itself runing in a big market with a greater potency for online merchandises than it had envisaged or planned for. The consequence was a restructuring of its operations to run into the demand. B. Obtaining Local Supplies Bing an on-line manner shop. the ability to acquire local providers goes a long manner in finding the sum of net income made. Local supply eliminates the assorted cost associated with acquiring supplies from outside the state – [ The mean mark-up for goods sold on Sabunta. com is 50 % ] . The Sabunta. com squad was concerned about acquiring high quality local supplies for their concern as the figure and industry size of local manner providers were non gettable from official records or research archives. However. the company was cheerily surprised at the big figure of local manner providers resident in Nigeria. The consequence has been high mark-ups on locally produced and sold merchandises. This has lead to profitableness in less clip than projected. [ Sabunta. com presently makes an mean gross net income of 40 % while their operating and net net incomes are still in the negative ] . c. Finding Adequate Logistic Suppliers To guarantee seasonably and accurate countrywide bringing. Sabunta. com required services from bringing houses who possess best patterns every bit good as offer cost-effectiveness as a value proposition. The house understood that a weak or inconsistent logistics arm ( for illustration due to different qualities of bringing by several logistic spouses ) will ensue in negative client perceptual experience. This challenge was overcome through a partnership with Red Star Express – a Franchisee of the US international messenger and logistics service supplier. FEDEX. that has been runing in Nigeria since 1992. Red Star Express cognition of the country’s transit substructure AIDSs in its optimum logistics service bringing. Furthermore. Red Star Express provides support with more than merely bringing and return of goods. It besides collects hard currency from clients who chose to pay in hard currency upon bringing. and remits these financess to Sabunta. This saves the company costs associated with hard currency direction. d. Recruitment of Required Personnel Another envisaged challenge was handiness of skilled local labour. Give the hapless province of Nigeria’s I. T. substructure and edification. the company was unsure of the handiness of I. T related skill sets to transport out Rocket’s theoretical account as practiced in assorted other markets. The company was nevertheless relieved to happen competent local endowment. Sabunta. com operates with a 100 % local I. T squad. capable of transporting out maps required by the Rocket theoretical account. 7. Challenge Despite Sabunta. com successes. the company faces a myriad of challenges. most of which consequence from differences between Rocket’s states of operation and the Nigerian market. Some of these challenges include: a. Challenges Resulting from Socio-Cultural and Socio-Economic Differences Unlike successes gained in recruiting and keeping local forces. Sabunta. com has non been able to keep its international staff. Over 70 per centum ( 70 % ) of Sabunta’s international staff who started out with the company left within two ( 2 ) months. The ground? Inability to acclimatise to the Nigerian environment with peculiar respects to the type of readily available nutrient every bit good as the deficiency of or the high costs of. basic comfortss such as nutrient. H2O. regular electricity supply. wellness services. cooking gas. transit. cyberspace connectivity. etc. Other grounds for the going of international staff included wellness concerns. As at August 2012. over 90 per centum of international staff who resumed operations with the company ( in June 2012 ) were diagnosed with malaria. a tropical disease most had neer experienced. Unanticipated costs and clip associated with replacement and developing international staff continues to blight Sabunta. com. B. Challenges Resulting from Unavailability of Infrastructure. Bing an e-commerce company. Sabunta. com nucleus operations involve the usage of the cyberspace. Consequently. the company requires dependable and ( sooner ) inexpensive cyberspace connectivity and power. Yet. neither internet connectivity nor power supply exists cheaply or faithfully in Nigeria. Nigeria generates and distributes less than 4. 000Megawatts – hardly plenty to function the nation’s power demands and ensuing in frequent power outages. Sabunta. com spends over N640. 000 ( ˆ3. 200 ) per month on Diesel to fuel their stand-by generators. and is invariably plagued with this high cost of power. The company besides has high cyberspace connectivity disbursals – N450. 000 ( ˆ2. 250 ) per month for a bandwidth size of 4/4Mbps. Even with such immense amounts spent on internet connexion. Sabunta. com continues to see less than optimum services from Nigerian cyberspace service suppliers. c. Challenges Resulting from Legislation A cardinal constituent of Sabunta’s scheme is offering a broad scope of international trade names in Nigeria. utilizing stock held by sister companies around the universe. Research and surveies of Nigerian importing Torahs suggested that importing of manner stock into Nigeria would be comparatively easy. This left the company vulnerable to the daze it received when the first set of drop-shipment was seized at the airdrome by the Nigerian Customs Service ( NCS ) . The NCS claimed that the goods contained points that were contraband in Nigeria. Sabunta responded by taking such points from their offerings – aroma and aromas. . Notwithstanding its response. Sabunta continues to confront of all time present menaces associated with prohibitions on importing of manner related points including fabric. leather. vesture. and places. Nigerian history reveals frequent policy alterations and incompatibilities with regard importing of goods into the state. long identified as a major cause of failure of concerns in Nigeria. Another challenge faced by Sabunta from the Nigerian statute law is the limitation placed by the CBN on the sale of Foreign Exchange to companies and single except for particular intents like the importing and exportation of goods and services and besides the payment of services abroad. This meant that Sabunta had to purchase foreign exchange at a higher monetary value in the black market to settle all its international staff’s wage and other payments which were denominated in US dollars. ( Official rate is 1 $ =159Naira as against the black market rate of 1 $ =163Naira ) . d. Challenges Resulting from Corrupt Practices. Despite the absence of contraband. Sabunta’s direction continue to see holds in the release of their cargo by Nigerian Customs functionaries. Further enquiry revealed that the logistic company they employed ( FEDEX ) to manage importing of their goods did non hold a good relationship with the Customss functionaries due to the company’s enforced policy of non offering payoffs as is the order of the twenty-four hours. Sabunta’s direction continue to see and accordingly to stay watchful to the changeless menace of deceitful and corrupt patterns that plaque concern in Nigeria. The company continues to confront the challenge of local concern spouses who try to cut corners and deliver less. Prior to partnering with FEDEX. a Nigerian messenger company was chosen and partnered with for local bringing. Similar to FEDEX’s aggregation and remittal of hard currency. the messenger company collected payment from clients on bringing. However. the company often fell short of its duties in footings of timing and sum of hard currency remitted. The messenger company besides failed to describe accurate figures collected from clients. and till day of the month. owe Sabunta over 40 % of payments collected. Sabunta was speedy to acknowledge this job and fleetly partnered with FEDEX for its logistics services. Nevertheless. other beginnings of corrupt patterns persist particularly from little independent service suppliers. This is peculiarly so with craftsman related services such as plumbing. equipment fixs and office care. and are frequent beginnings of lost financess or delayed services to Sabunta. 8. SABUNTA’S FUTURE: THE Amalgamation Plans are presently being made for a amalgamation with Kasuwa. Rocket Internet’s other company in Nigeria. besides launched in June 2012. to organize Jumia. The amalgamation is expected to ensue in the biggest e-commerce retail merchant in Nigeria – a one-stop store for all merchandises related to manner and electronic points. The new web site. Jumia. com. will offer a wider assortment of international trade names. utilizing schemes presently employed by Sabunta. Jumia is intended to supply benefits associated with graduated table such as price reductions and dickering power ( in relation to providers ) . while turn toing current challenges faced by both companies. They include: a. Staffing: The amalgamation is expected to cut down the figure of needed staff. This will ensue in the decrease of salary disbursals and will ensue in the demand for fewer international staff. In other words. international staff who have acclimatized to Nigeria from both companies may go on to supply required services to Jumia without the demand to enroll and retain new staff. B. Office Space: The amalgamation is expected to ensue in shared office infinite at a cost smaller than the combined cost of Sabunta and Kasuwa’s current office cost. c. Fueling and Power: Similar to the consequence on office infinite. the amalgamation is expected to ensue in fueling and power costs that will be smaller than the combined current cost of both companies current fueling and power demands. d. Internet Connectivity: More than merely decrease in costs. the amalgamation is expected to ensue in Jumia’s ability to buy larger bandwith sizes straight from cyberspace suppliers in South Africa. Europe. and North America. This will turn to the undependability of internet connectivity presently faced by Sabunta and Kasuwa. e. Repair and Maintenance: It is expected that the larger Jumia will be able to spouse with big and dependable suppliers of office and equipment fixs therefore extinguishing little service suppliers who have corrupt or undependable patterns. 9. RECOMMENDATIONS 11Doing a proper market research and analysis When come ining a foreign market. it is recommended that a house carry out proper market research and analysis on that market prior to entry. Exceed on the list is an environmental analysis that needs to be taken besides. There are unmanageable forces which are external forces upon which the direction has no direct control. and it can exercise an influence. There are besides Internal forces which are governable forces upon which the direction to accommodate to. 12Form Strategic Alliances When come ining a foreign market. it is recommended that a steadfast forge strategic confederation to enable them acquire the undermentioned * Great synergism with the partnering local company. * Opportunity to entree assets that are non readily available in the market. * Access to larger market and engineering for little companies. 11 Jusuf Zekiri and Biljana Angelova. Factors that Influence Entry Mode Choice in Foreign Markets. European Journal of Social Sciences – Volume 22. Number 4 ( 2011 ) . hypertext transfer protocol: //www. eurojournals. com/EJSS_22_4_12. pdf. accesses August 2012. 12 Mihaela Belu. Schemes of Entering New Markets. The Rumanian Economic Journal. hypertext transfer protocol: //www. rejournal. eu/Portals/0/Arhiva/JE % 2027/JE % 2027 % 20- % 20Belu % 20Caragin. pdf. accessed August 2012. Appendix 1 Mobile Money In NigeriaMobile money as the name implies is the transportation of pecuniary value from one person’s Mobile phone to another. It has been made moving ridges and affected commercialism greatly in certain parts of eastern Africa where it was launched in 2009. In Nigeria. the CBN ( Central Bank of Nigeria ) . granted licence to 11 nomadic money operators in 2011. The CBN rolled out the Mobile money run in Lagos State. Nigeria commercial nervus centre in January 2012. and planned establishing it around the federation by 2013. The CBN besides put in topographic point some inducements for utilizing the Mobile money services. by puting charges for Bank hard currency minutess above 500. 000 for persons and 1million naira for companies. | Appendix 2 Economicss of Lagos StateLagos State is the commercial nervus Centre of Nigeria. Located in the western portion of Nigeria. it is home to over 18million people and has over 2. 000 industries. 65 % of the country’s commercial activities are carried out in the province. Two of the nation’s largest havens -Apapa and Tin-Can Ports are located in Lagos State. | Appendix 3 Income Distribution of the Nigeria Population in 2010 Nigeria Population in 2010-156. 051. 000 ( Beginning: International Monetary Fund – 2011 World Economic Outlook ) This study shows the distribution for seven groups within the Nigerian Population in 2010. Percentage of population in income bracket of 0-500 PPP Dollars –55. 68 % Percentage of population in income bracket of 500-1000 PPP Dollars-28. 22 % Percentage of population in income bracket of 1000-2500 PPP Dollars- 14. 61 % Percentage of population in income bracket of 2500-5000 PPP Dollars- 1. 17 % Percentage of population in income bracket of 5000-10000 PPP Dollars- 0. 17 % Percentage of population in income bracket of 10000-20000 PPP Dollars- 0. 05 % Percentage of population in income bracket of 20000+ PPP Dollars- 0. 1 % Source-Marketline analysis based on information from National Statistical Organization

Coldest Capital Cities of the World

Coldest Capital Cities of the World The coldest capital city in the world is not in Canada or in Northern Europe but in Mongolia; its Ulaanbaatar, with an average annual chilly temperature of 29.7 °F and -1.3 °C. How to Determine the Coldest Cities Southern capital cities just dont reach far enough south to get very cold. For instance, if you think about the southernmost capital in the world Wellington, New Zealand - images of ice and snow are probably far from your mind. Thus, the answer had to lie in the higher latitudes of the Northern Hemisphere. Searching WorldClimate.com for the annual mean of the daily (24-hour) temperature for each capital city in that area, one can find which cities are, in general, the coldest. A List of the Coldest Cities Interestingly, Ottawa, considered an extremely cold city in North America, had an average of only 41.9 °F/5.5 °C- meaning it wasnt even in the top five! Its number seven. Also interesting is that the northernmost capital city in the world- Reykjavik, Iceland- is not number one; it falls in the list at number five. Good data for the capital of Kazakhstan, Astana, just doesnt exist, but it would appear from nearby climate data and other sources of information that Astana falls between number one (Ulaanbaatar) and number three (Moscow). Heres the list, starting with the coldest. Ulaan-Baatar (Mongolia) 29.7 °F/-1.3 °C Ulaanbaatar  is  the largest city of Mongolia as well as its capital and is a destination for both business and pleasure trips. It is below zero for five months of the year. January and February are the coldest months with the temperature ranging  between -15 °C and -40 °C. The average annual temperature is -1.3 °C. Astana (Kazakhstan) (Data Unavailable) Astana is one of the strangest cities that exists, with tall futuristic-looking buildings made of shiny metal and glass rising abruptly out of the flat steppe landscape on the banks of Ishim River. It is the second largest city in Kazakhstan. Astana means the capital city in Kazakh. It was designated the capital city in 1997 and the previous name was changed to Astana in 1998. The climate is extreme. Summers can be very warm, with temperatures occasionally reaching 35 °C (95 °F) while winter temperatures can fall to -35 °C (-22 to-31 °F) between mid-December and early March. Moscow (Russia) 39.4 °F/4.1 °C Moscow is the capital of Russia and the largest city on the European continent.  It is situated on the  Moskva River. It has  the largest forest area within its borders of any other major city and is  well-known for its many parks and distinctive architecture. The winters in Moscow are long and cold, lasting from the middle of November until the end of March, with winter temperatures varying widely from -25 °C (-13 °F) in the city, and even colder in the suburbs, to above 5 °C (41 °F). In the summer the temperature ranges from 10 to 35 °C (50 to 95 °F). Helsinki (Finland) 40.1 °F/4.5 °C Helsinki is both the capital and largest city of Finland, situated on the shore of the Gulf of Finland on the tip of a peninsula and on 315 islands. The average winter temperature in January and February is -5 °C (23 °F). Given Helsinkis northern latitude one would normally expect colder winter temperatures, but the Baltic Sea and North Atlantic Current have a mitigating effect on the temperatures, keeping them somewhat warmer in the winter, and cooler during the day in the summer. Reykjavik (Iceland) 40.3 °F/4.6 °C Reykjavik is Icelands capital and largest city. It is located in southwestern Iceland on the shore of Faxa Bay and is the worlds northernmost capital of a sovereign state. Like Helsinki, temperatures in Reykjavik are affected by the North Atlantic Current, an extension of the Gulf Stream. The temperatures are warmer in the winter than would be expected by the latitude, rarely falling below -15 °C (5 °F), and the summers are cooler, with temperatures generally ranging between 10 and 15 °C (50 and 59 °F). Tallinn  (Estonia) 40.6 °F/4.8 °C Tallinn is the capital and largest city of Estonia. It is located at the northernmost part of Estonia on the shore of the Gulf of Finland. It was first established in medieval times but is now a mix of ancient and modern. It has the distinction of being dubbed the Silicon Valley of Europe and has the highest number of startups per person in Europe. Skype, for example, got its start there. Due to its location on the coast and mitigating effect of the sea, the winters are cold but warmer than one would expect for the latitude. February is the coldest month, with the average temperature being -4.3 °C (24.3 °F). Throughout the winter, temperatures are close to freezing. Summers are comfortable with temperatures during the day between 19 and 21 °C (66 to 70 °F). Ottawa (Canada) 41.9 °F/5.5 °C In addition to being its capital, Ottawa is the fourth largest city in Canada, most educated, and has the highest standard of living in Canada. It is in southern Ontario on the Ottawa River.  Winters are snowy and cold, with an average January minimum temperature of -14.4 °C (6.1 °F), while summers are warm and humid, with an average July maximum temperature of 26.6 °C (80 °F).

Should one be concerned about rising levels of inequality in the Research Paper

Should one be concerned about rising levels of inequality in the global economy - Research Paper Example On contrary, some inequalities are known to promote investments but excessive implication of this global economic inequality results to destructive options. The income inequality can easily obstruct long-term growth and development. It is also famous for increasing the country’s economic growth duration and has a more complicated spell than low government corruption, free trade, foreign investment and any outstanding foreign debt. In a global perspective, the focus on opportunity and income disparities comes as Europe and United States struggle with the increasing economic downfall, which widens the gap between the poor and the rich. This situation has dominated the prime reason on the Americans choice of the presidential election and spurred common European street protests. At the same instance, economic inequality is taking a profound position in developing countries such as India and China. Despite the unscathed escape of global economic recession in these developing nations, a comprehensive study points out that decrease and growth of poverty levels in these nations coincides with inequality rise leading to imperative social tension. The global inequality shrinks in the presence of emerging markets and power shifts. Many nations greatly oppose the widening gap trend hence making the issue of global economic inequality a focal point (Ferreira and Walton 67). Global economic inequality has a tendency to vary in regard to historical periods, societies, economic systems and structures. The term has a direct reference to the cross-sectional distribution of wealth and income at a particular period. There are several numerical indices for economic inequality measurement, but a commonly used one is the Gini coefficient. Many are also the reasons for the emergence of economic inequality within the society. A recent development on the overall income inequality amongst OECD countries has been commonly

Seminar in Macroeconomic Theory Assignment Example | Topics and Well Written Essays - 750 words

Seminar in Macroeconomic Theory - Assignment Example Fund raised will be used to cover the allocation the health sector that is a principal consumer of the federal budgetary provisions. Another strategy will involve the Congress amending the constitution to include a provision requiring the federal government to prepare a balanced budget. While trying to promote a more balanced budget through constitutional amendments, it is critical note that poorly crafted changes can trigger instances of economic instability. Any draft amendment should have an element of limited flexibility catering for emergency situations like a recession. As a measure, the federal government ought to encourage the establishment and registration of businesses in the USA. This will put the USA federal government in a better position to grows revenue to support its ever increasing expenditure. Homegrown companies should be encouraged to base their manufacturing firm within the states instead of operating their factories oversee. This will reduce the level of economic unemployment and the government will in turn reap in the form of more taxes. The federal government has an obligation of controlling to control its borrowing. Borrowing increases the government obligation in the form of the interest payable on these loans. The defense department and the intelligence department have been conveniently decreased measure to reduce the cost incurred in many operations conducted by these departments. The wars in Middle East and international missions are the cause of the high expenditures here; these can be reduced to manageable levels. Additionally there is a proposition that allows the government to repay the debt in an effort to reduce amounts paid periodically as interests on these loans. Observing the total amount payable towards settling the entire National Debt, it is evident that the accumulative interest is very high, and it siphons the nation’s resources and contributing to the greater budget deficit. Therefore, proposed that the

Understanding Inventory Management And Its Theories

Understanding Inventory Management And Its Theories Inventory management or inventory control is an attempt to balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory. There are several schools of thought that view inventory and its function differently. These will be addressed later but first we present a foundation to facilitate the readers understanding of inventory and its function. Inventory Definition Inventory is a quantity or store of goods that is held for some purpose or use (the term may also be used as a verb meaning to take inventory or to count all goods held in inventory). Inventory may be kept in house meaning on the premises or nearby for immediate use or it may be held in a distant warehouse or distribution center for future use. With the exception of firms utilizing just in time methods more often than not the term inventory implies a stored quantity of goods that exceeds what is needed for the firm to function at the current time (e.g., within the next few hours). Why we should keep inventory Why would a firm hold more inventory than is currently necessary to ensure the firms operation? The following is a list of reasons for maintaining what would appear to be excess inventory. MEET DEMAND. In order for a retailer to stay in business it must have the products that the customer wants on hand when the customer wants them? If not the retailer will have to back order the product. If the customer can get the good from some other source he or she may choose to do so rather than electing to allow the original retailer to meet demand later (through back order). Hence, in many instances if a good is not in inventory a sale is lost forever. KEEP OPERATIONS RUNNING. A manufacturer must have certain purchased items (raw materials components or subassemblies) in order to manufacture its product. Running out of only one item can prevent a manufacturer from completing the production of its finished goods. Inventory between successive dependent operations also serves to decouple the dependency of the operations. A machine or work center is often dependent upon the previous operation to provide it with parts to work on. If work ceases at a work center then all subsequent centers will shut down for lack of work. If a supply of work in process inventory is kept between each work center then each machine can maintain its operations for a limited time hopefully until operations resume the original center. LEAD TIME. Lead time is the time that elapses between the placing of an order (either a purchase order or a production order issued to the shop or the factory floor) and actually receiving the goods ordered. If a supplier (an external firm or an internal department or plant) cannot supply the required goods on demand then the client firm must keep an inventory of the needed goods. The longer the lead time the larger the quantity of goods the firm must carry in inventory. A just in time (JIT) manufacturing firm such as Nissan in Smyrna Tennessee can maintain extremely low levels of inventory. Nissan takes delivery on truck seats as many as 18 times per day. However steel mills may have a lead time of up to three months. That means that a firm that uses steel produced at the mill must place orders at least three months in advance of their need. In order to keep their operations running in the meantime an on hand inventory of three months steel requirements would be necessary. HEDGE. Inventory can also be used as a hedge against price increases and inflation. Salesmen routinely call purchasing agents shortly before a price increase goes into effect. This gives the buyer a chance to purchase material in excess of current need at a price that is lower than it would be if the buyer waited until after the price increase occurs. QUANTITY DISCOUNT. Often firms are given a price discount when purchasing large quantities of a good. This also frequently results in inventory in excess of what is currently needed to meet demand. However if the discount is sufficient to offset the extra holding cost incurred as a result of the excess inventory the decision to buy the large quantity is justified. SMOOTHING REQUIREMENTS. Sometimes inventory is used to smooth demand requirements in a market where demand is somewhat erratic. Consider the demand forecast and production schedule outlined in Table 1. Notice how the use of inventory has allowed the firm to maintain a steady rate of output thus avoiding the cost of hiring and training new personnel while building up inventory in anticipation of an increase in demand. In fact this is often called anticipation inventory. In essence the use of inventory has allowed the firm to move demand requirements to earlier periods thus smoothing the demand. Controlling Inventory Firms that carry hundreds or even thousands of different part numbers can be faced with the impossible task of monitoring the inventory levels of each part number. In order to facilitate this many firms use an ABC approach. ABC analysis is based on Pareto Analysis also known as the 80/20 rule. The 80/20 comes from Paretos finding that 20 percent of the populace possessed 80 percent of the wealth. From an inventory perspective it can restated thusly: approximately 20 percent of all inventory items represent 80 percent of inventory costs. Therefore a firm can control 80 percent of its inventory costs by monitoring and controlling 20 percent of its inventory. But it has to be the correct 20 percent. The top 20 percent of the firms most costly items are termed An items (this should approximately represent 80 percent of total inventory costs). Items that are extremely inexpensive or have low demand are termed C items with B items falling in between A and C items. The percentages may vary with each firm but B items usually represent about 30 percent of the total inventory items and 15 percent of the costs. C items generally constitute 50 percent of all inventory items but only around 5 percent of the c By classifying each inventory item as an A B or C the firm can determine the resources (time effort and money) to dedicate to each item. Usually this means that the firm monitors A items very closely but can check on B and C items on a periodic basis (for example monthly for B items and quarterly for C items). Another control method related to the ABC concept is cycle counting. Cycle counting is used instead of the traditional once a year inventory count where firms shut down for a short period of time and physically count all inventory assets in an attempt to reconcile any possible discrepancies in their inventory records. When cycle counting is used the firm is continually taking a physical count but not of total inventory. A firm may physically count a certain section of the plant or warehouse moving on to other sections upon completion until the entire facility is counted. Then the process starts all over again. The firm may also choose to count all the A items then the B items and finally the C items. Certainly the counting frequency will vary with the classification of each item. In other words an item may be counted monthly B items quarterly and C items yearly. In addition the required accuracy of inventory records may vary according to classification with A items requiring the most accurate record keeping. Balancing Inventory and Cost As stated earlier inventory management is an attempt to maintain an adequate supply of goods while minimizing inventory costs. We saw a variety of reasons companies hold inventory and these reasons dictate what is deemed to be an adequate supply of inventory. Now how do we balance this supply with its costs? First lets look at what kind of costs we are talking about. There are three types of costs that together constitute total inventory costs: holding costs set up costs and purchasing costs. Holding Costs. Holding costs also called carrying costs are the costs that result from maintaining the inventory. Inventory in excess of current demand frequently means that its holder must provide a place for its storage when not in use. This could range from a small storage area near the production line to a huge warehouse or distribution center. A storage facility requires personnel to move the inventory when needed and to keep track of what is stored and where it is stored. If the inventory is heavy or bulky forklifts may be necessary to move it around. Storage facilities also require heating cooling, lighting and water. The firm must pay taxes on the inventory and opportunity costs occur from the lost use of the funds that were spent on the inventory. Also obsolescence pilferage (theft) and shrinkage are problems. All of these things add cost to holding or carrying inventory. If the firm can determine the cost of holding one unit of inventory for one year (H) it can determine its annual holding cost by multiplying the cost of holding one unit by the average inventory held for a one year period. Average inventory can be computed by dividing the amount of goods that are ordered every time an order is placed (Q) by two. Thus average inventory is expressed asQ/2. Annual holding cost then can be expressed asH(Q/2). Set Up Cost Set up costs are the costs incurred from getting a machine ready to produce the desired good. In a manufacturing setting this would require the use of a skilled technician (a cost) who disassembles the tooling that is currently in use on the machine. The disassembled tooling is then taken to a tool room or tool shop for maintenance or possible repair (another cost). The technician then takes the currently needed tooling from the tool room (where it has been maintained another cost) and brings it to the machine in question. There the technician has to assemble the tooling on the machine in the manner required for the good to be produced (this is known as a set up). Then the technician has to calibrate the machine and probably will run a number of parts that will have to be scrapped (a cost) in order to get the machine correctly calibrated and running. All the while the machine has been idle and not producing any parts (opportunity cost). As one can see there is considerable cost involved in set up. If the firm purchases the part or raw material then an order cost rather than a set up cost is incurred. Ordering costs include the purchasing agents salary and travel entertainment budget administrative and secretarial support office space copiers and office supplies forms and documents long distance telephone bills and computer systems and support. Also some firms include the cost of shipping the purchased goods in the order cost. If the firm can determine the cost of one set up (S) or one order it can determine its annual setup order cost by multiplying the cost of one set up by the number of set ups made or orders placed annually. Suppose a firm has an annual demand (D) of 1,000 units. If the firm orders 100 units (Q) every time it places and order the firm will obviously place 10 orders per year (D/Q). Hence, annual set up order cost can be expressed asS (D/Q). Purchasing Cost Purchasing cost is simply the cost of the purchased item itself. If the firm purchases a part that goes into its finished product the firm can determine its annual purchasing cost by multiplying the cost of one purchased unit (P) by the number of finished products demanded in a year (D). Hence, purchasing cost is expressed asPD. Now total inventory cost can be expressed as: Total = Holding cost + Set-up/Order cost + Purchasing cost or Total =H(Q/2) +S(D/Q) +PD If holding costs and set-up costs were plotted as lines on a graph the point at which they intersect (that is the point at which they are equal) would indicate the lowest total inventory cost. Therefore if we want to minimize total inventory cost every time we place an order, we should order the quantity (Q) that corresponds to the point where the two values are equal. If we set the two costs equal and solve forQwe get: H(Q/2) =S(D/Q) Q= 2DS/H The quantity is known as the economic order quantity (EOQ). In order to minimize total inventory cost, the firm will order every time it places an order. For example, a firm with an annual demand of 12,000 units (at a purchase price of $25 each), annual holding cost of $10 per unit and an order cost of $150 per order (with orders placed once a month) could save $800 annually by utilizing the EOQ. First, we determine the total costs without using the EOQ method: Q= $10(1000/2) + $150(12,000/1000) + $25(12,000) = $306,800 Then we calculate EOQ: EOQ = 2(12,000)($150)/$10= 600 And we calculate total costs at the EOQ of 600: Q= $10(600/2) + $150(12,000/600) + $25(12,000) = $306,000 Finally, we subtract the total cost ofQfromQto determine the savings: $306,800 à ¢Ãƒâ€¹Ã¢â‚¬   306,000 = $800 Notice that if you remove purchasing cost from the equation the savings is still $800. We might assume this means that purchasing cost is not relevant to our order decision and can be eliminated from the equation. It must be noted that this is true only as long as no quantity discount exists. If a quantity discount is available the firm must determine whether the savings of the quantity discount are sufficient to offset the loss of the savings resulting from the use of the EOQ. There are a number of assumptions that must be made with the use of the EOQ. These include: Only one product is involved. Deterministic demand (demand is known with certainty). Constant demand (demand is stable through-out the year). No quantity discounts. Constant costs (no price increases or inflation) While these assumptions would seem to make EOQ irrelevant for use in a realistic situation it is relevant for items that have independent demand. This means that the demand for the item is not derived from the demand for something else usually a parent item for which the unit in question is a component. For example the demand for steering wheels would be derived from the demand for automobiles dependent demand but the demand for purses is not derived from anything else purses have independent demand. Other Lot Sizing Techniques There are a number of other lot sizing techniques available in addition to EOQ. These include the fixed order quantity fixed order interval model the single period model and part period balancing. Fixed Order Quantity Model EOQ is an example of the fixed order quantity model since the same quantity is ordered every time an order is placed. A firm might also use a fixed order quantity when it is captive to packaging situations. If you were to walk into an office supply store and ask to buy 22 paper clips chances are you would walk out with 100 paper clips. You were captive to the packaging requirements of paper clips i.e. they come 100 to a box and you cannot purchase a partial box. It works the same way for other purchasing situations. A supplier may package their goods in certain quantities so that their customers must buy that quantity or a multiple of that quantity. FIXED ORDER INTERVAL MODEL. The fixed order interval model is used when orders have to be placed at fixed time intervals such as weekly biweekly or monthly. The lot size is dependent upon how much inventory is needed from the time of order until the next order must be placed order cycle. This system requires periodic checks of inventory levels and is used by many retail firms such as drug stores and small grocery stores. SINGLE-PERIOD MODEL. The single period model is used in ordering perishables such as food and flowers and items with a limited life such as newspapers. Unsold or unused goods are not typically carried over from one period to another and there may even be some disposal costs involved. This model tries to balance the cost of lost customer goodwill and opportunity cost that is incurred from not having enough inventory with the cost of having excess inventory left at the end of a period. PART-PERIOD BALANCING. Part period balancing attempts to select the number of periods covered by the inventory order that will make total carrying costs as close as possible to the set up order cost. When a proper lot size has been determined utilizing one of the above techniques the reorder point or point at which an order should be placed can be determined by the rate of demand and the lead time. If safety stock is necessary it would be added to the reorder point quantity. Reorder point =Expected demand during lead time + Safety stock Thus an inventory item with a demand of 100 per month a two month lead time and a desired safety stock of two weeks would have reorder point of 250. In other words an order would be placed whenever the inventory level for that good reached 250 units. Reorder point =100/month ÃÆ'- 2 months + 2 weeks safety stock = 250 Other thoughts in Inventory Management There are a number of techniques and philosophies that view inventory management from different perspectives. MRP AND MRP II. MRP and MRP II are computer based resource management systems designed for items that have dependent demand. MRP and MRP II look at order quantities period by period and as such allow discrete ordering only what is currently needed. In this way inventory levels can be kept at a very low level a necessity for a complex item with dependent demand. JUST-IN-TIME (JIT). Just in time (JIT) is a philosophy that advocates the lowest possible levels of inventory. JIT espouses that firms need only keep inventory in the right quantity at the right time with the right quality. The ideal lot size for JIT is one even though one hears the term zero inventory used. Theory of Constraints Theory of constraints (TOC) is a philosophy which emphasizes that all management actions should center about the firms constraints. While it agrees with JIT that inventory should be at the lowest level possible in most instances it advocates that there be some buffer inventory around any capacity constraint e.g. the slowest machine and before finished goods. Future of Inventory Management The advent through altruism or legislation of environmental management has added a new dimension to inventory management reverse supply chain logistics. Environmental management has expanded the number of inventory types that firms have to coordinate. In addition to raw materials work in process finished goods and MRO goods firms now have to deal with post consumer items such as scrap returned goods reusable or recyclable containers and any number of items that require repair reuse recycling or secondary use in another product. Retailers have the same type problems dealing with inventory that has been returned due to defective material or manufacture poor fit finish or color or outright I changed my mind responses from customers. Finally supply chain management has had a considerable impact on inventory management. Instead of managing ones inventory to maximize profit and minimize cost for the individual firm todays firm has to make inventory decisions that benefit the entire supply chain.

Content Analysis of a Recent Film Compared

The film, Perfume, which directed by Tom Tykwer and released in 2006, was rated R because of its restricted scenes. Back to the 1930 to 1968 the United States, such a film like Perfume may have difficult in being released based on the Production Code. Production Code was an industry censorship guideline that governed most of United States motion picture. It has 3 General Principles which stated the films could not lower the audiences’ moral standards, should contain the correct standards of life and not be ridiculed.According to the Production Code, Perfume will have 3 main problems, Crimes against the Law, Sex and Costume. Perfume has a subtitle called the Story of A Murderer. Obviously, it describes a story of crime. However, in the film, there are so many directly bloody, crucial scenes about murder, which are violation of the first rule in Production Code, Crime against the Law. For example, at the beginning of the film, when the main character, Jean-Baptiste Grenouille wa s a baby, he was sent to the orphanage.While other orphans wanted to suffocate him with a pillow in order to keep their own possession. In this scene, the director showed the whole process of killing, which is against the rule that indicates brutal killings are not to be presented in detail. As the same, there are also brutal scenes about the old woman being cut the throat as well as Jean’s mother and the scapegoat of the murder being hung to death. All these scenes are clearly projected without any editing. Besides the violation of the Production Code of Crime against the Law, there are also restricted scenes about Sex.For instance, one of these scenes is the birth of Jean. The director shot the whole process of the mother giving birth to Jean, even included her cutting umbilical. It must be against the rule of Sex that stated scenes of actual child birth, in fact or in silhouette, are never to be presented. What is more, in the end of the film, when Jean was about to be kil led in the square, he used his perfume to make onlookers excited and have sex with each other, even includes homosexual kiss.In order to make shaking visual effect, the director didn’t do any editing on this scene, which strongly offense the Production Code of Sex. Apart from Crime against the Law and Sex, what the film violated the Production Code most must be Costume. Perfume told a story about odor. The murderer, Jean, found the most beautiful scent came from the natural smell of virgin. So he killed 13 virgins and took off their clothes to purity their scent. After each murder, the girl’s corpus would be found naked.As a consequence, the violation of Costume can not be avoided. In the Production Code of Costume, it claimed that complete nudity is never permitted and undressing scenes should be avoided. Nevertheless, these scenes were all projected in Perfume. Moreover, the scene mentioned before about the group sex also conflict the Production Code of Costume. As a n R rated film, Perfume exactly contains various restricted scenes. Except the violations mentioned before, there are also scenes counter the Production Code.For example, Jean used a cat for experiment and put it into the distillation furnace, which can be considered as apparent cruelty to animal; as well as the violence and expletives. A movie like this apparently can not get PCA approval to be released. Nevertheless, the film can be played in theaters today without any cut and edit, even though it was rated R and could just be watched by portion of people. It witnessed that social standards of motion picture has changed a lot over time.

What Are The Two Major Uses Of Managerial Accounting...

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